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Global stocks shaky as Syrian conflict hits Russian rouble

Reuters  |  LONDON 

By Marc Jones

LONDON (Reuters) - Financial markets lost ground on Wednesday as heightened tension over and U.S. sanctions drove Russia's rouble to a two-year low and boosted safety plays at the expense of the dollar.

Many of the world's main stock markets were back in the red after two days of gains. Gold rose for a fourth session, though it was the hammering of Russia's and also Turkey's currencies that drew most attention.

The rouble slumped as much as 2.5 percent against the dollar and even more versus the Turkey's lira tumbled to a record low, maintaining its position as one of the world's worst performers this year.

The fallout from new U.S. sanctions on continued to rattle investors and fears of military action were stoked after one of Russia's reiterated it would shoot down any U.S. missiles fired at

"Get ready Russia, because they will be coming," U.S. then tweeted in his opening flurry of the day. "You shouldn't be partners with a Gas Killing Animal who kills his people and enjoys it!"

The said that 43 people had died in Saturday's attack on Douma from "symptoms consistent with exposure to highly toxic chemicals", and more than 500 in all had been treated.

Some airlines were re-routing flights after Europe's air traffic control agency warned aircraft flying over the to exercise caution because of possible air strikes against

"We are more neutral today (in terms of risk asset allocation) than we have been at any time over the last two years," said.

"For now we are mainly focusing on lowering exposure in and having a more cautious stance from a tactical perspective overall on asset allocation."

The dollar remained near two-week lows as trade war worries with and domestic scandals also swirled around Trump.

Markets were also digesting the first fall in U.S. inflation in 10 months, which will feed into the debate on when the Federal Reserve next raises U.S. interest rates.

The dollar index versus a basket of six peers was down 0.1 percent at 89.472 and within sight of a low of 89.251 set on March 28. Government bonds meanwhile made gains, with European and U.S. yields around the 0.50 and 2.80 percent marks. [GVD/EUR]

Any style conflict or a full-blown trade battle or would hit the world and upset the plans of central banks to tighten policy - fuelling demand for government bonds.

However, Chinese and Trump had both struck conciliatory tones on Tuesday, boosting hopes the door to trade negotiations might open. But one report said early talks had already broken down.

"The risk of a full-blown trade war ... poses the most serious risk to continued strong global momentum," said. He said he doubted there would be a further escalation at this point.

Wall Street also looked set for a softer start later with mini futures down 0.7 percent. [.N]

The pan-European index was last down 0.8 percent, while in overnight Japan's stocks both lost 0.4 percent, South Korea's dipped 0.2 percent though did end higher.

shares fared better after China's central set out the clearest timetable yet for opening to foreign investors.

It will allow offshore companies to enter its trust, financial leasing, auto and consumer sectors by the end of this year.

watchers said the announcement may further ease trade tensions. But they remained cautious, noting that action had yet to be taken and pointing out that foreign companies still face unofficial barriers in sectors ostensibly already opened up.

Back among the currencies, the yen and were both a shade higher at 107 yen and $1.2365 respectively.

It was the common currency's fourth session of gains and it stayed close to two-week high of $1.2378 it had reached overnight after policymaker told it could get rate hikes rolling once its 2.55 trillion-bond-buying programme ends this year.

The has risen about 3 percent this year on expectations the ECB will eventually normalise monetary policy and raise interest rates.

"We anticipate further, gradual appreciation versus the dollar over the course of 2018," ANZ's head of global economics, Brian Martin, wrote.

OIL AND GOLD SHINE

The day's other eye-catching moves came in commodity markets. Safe-haven gold touched a one-week high of $1,342.64 an ounce.

Oil hit its highest in more than three years with Brent crude jumping to a high of nearly $72 a barrel and U.S. crude futures rising 83 cents from their last close to $66.34 a barrel.

is not a significant oil producer, but any sign of conflict in the region tends to trigger concern about disruption to crude flows across the wider Middle East, home to some of the world's biggest producers.

There are also concerns that the could renew sanctions against Iran, an ally of

"The focus right now is definitely on a possible military strike against Syria," said.

(Additional reporting by and in London, editing by Larry King)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 11 2018. 19:11 IST
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